When it’s your first time as a landlord, it’s good to be clear on what the outgoings are so you can have a better understanding of your overall income. When you appoint an agent to let your property out, there are a few different fees that you must be aware of, though the main two are the letting fee and the management fee.
The letting fee is incurred once a property manager has found and placed a tenant for you. The average fee is usually equivalent to two weeks rent, though this can be negotiated prior to signing any agreements with your agent. You must pay this fee every time a new tenant is placed in your property and is over and above any advertising expenditure.
The management fee is an ongoing expense that is charged as a percentage. Depending on your agent, the fees usually vary between five percent to eight percent plus GST. It is deducted monthly from you rent and covers the ongoing management of your property. This includes, taking care of all of yours and your tenant’s needs, conducting routine inspections, organising all maintenance and repair works and anything else that affects your investment property. Your agent should keep you up to date with everything that is going on and make sure your property is being looked after always.
If you change your management for your property with a tenant in place, you do not have to pay for any letting fees and it is free and simple. All you need to do is choose another agent and they will do the rest. You will have to negotiate your management fee and will incur charges as per your agreement.
The following advice is of a general nature and intended as an opinion and broad guide. For all legal, financial or real estate advice you should obtain independent professional advice to do with the specific nature of your circumstances before making any legal, financial or real estate decisions.